Vishal Shah, Managing Director, Head of Business Banking joins Thomas Baxendale.

From strategy to SME success 🚀✨

Vishal Shah, Managing Director and Head of Business Banking at RAKBANK, joins Thomas Baxendale, Head of Digital Business Banking at RAKBANK, for an insightful conversation on leadership, the resilience of SMEs, and how the UAE continues to empower businesses to grow and thrive.

From supporting entrepreneurs to driving innovation across the business banking landscape, Vishal shares the mindset, experiences, and lessons shaping the future of SMEs in the UAE.

🎧 Watch or Listen now:
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#RAKBANK #DigitalWithAHumanTouch #SMESouk #BusinessBanking #SMEs

Transcript

SPEAKER_01 0:06

Welcome to this very special episode of the SME Soup Podcast. Joining me today is Vishal Shah, the managing director of business banking here at Rackbank. Vishal is a leader who spends as much time on SMEs, AI, and embedded finance as he does on his golf swing. Vishal brings over 25 years of experience across SME, commercial and retail banking, with leadership roles spanning Asia and the Middle East at institutions including Standard Chartered, T-Com Bank, and GXS Bank. At GXS, he built and scaled the SME business across Singapore and Malaysia, leveraging partnerships, data and AI, and led the acquisition and integration of Validus Capital. A passionate advocate for using technology to help businesses grow smarter and faster, and a father of two, we welcome Vishal to the episode. Vishal, welcome to the podcast. Thank you. So we're filming this in May. We're obviously in unprecedented times. How do you think the SME market is handling the current situation?

SPEAKER_00 1:02

So look, I think these are unprecedented times. Obviously, uh the crisis is still evolving and emerging. I would take it in three parts. First is the SMEs who were serving, especially say in Dubai, and very much linked into the travel and tourism industry, have obviously seen significant impact in terms of sharp fall in if so, if you're a rent a car business from the peaks of what you saw in January, February, you've obviously seen the trough now. Having said that, the SMEs who are serving the resident population have shown a lot more resilience. And especially with distance learning, which was implemented, and now, you know, back to school. Yes, we have a bit of a stopstart happening, but we see the demand for SMEs who are serving resident population certainly improve. Uh, and the B2B businesses uh who are obviously uh serving uh you know imports and exports have seen disruption in their supply chain. Having said that, uh over the last two months or so since uh you know since when the conflict has uh started, many of them have adjusted their supply chains. So if the port was shipping was saying in Dubai, Jabalali, now they would adjust into say Fujera or even go down to the Red Sea in Jeddah. So so we've seen uh that. So by and large, I would say uh we we see pretty strong resilience.

SPEAKER_01 2:37

So good. I mean, in turbulent times, obviously there are there are there are areas where we need resilience and businesses that are accommodating to that, but there's also areas where there are opportunities to be sought, right? What are you seeing?

SPEAKER_00 2:51

Yeah, so that's a very interesting question. What we are seeing is uh, you know, the the the theme which has started, in fact, a few years ago, which is make it in the Emirates. The crisis is kind of accelerating that theme. Uh say 20 years ago in the UAE, you would hardly see any food and beverage being manufactured, produced, I should say, yeah. But now you see a lot of that. So, so and and just recently, yesterday, you know, uh we uh uh I mean we were quite well represented in Abu Dhabi with Make It in the Emirates uh convention, which has been going on for the entire week. And uh His Highness uh uh uh Mohammed bin Zayed, uh, along with uh uh his entire team were also there. So we we can see that a large part of the businesses, you know, uh while there are challenging times, at the same time, the theme which came out very, very strongly is make it in the Emirates. Uh, right, and and different diverse industries were represented, right? From food and agricultural products to defense to infrastructure, uh, obviously, you know, the good old oil and gas. So in each of these, we now see that transition that, you know, UAE not just being a trade hub uh and from a from a manufacturing perspective more on oil and gas, but a number of industries. Uh so so that with the crisis is getting more accelerated. Second, food security is a very, very big theme and big part. So again, as part of make it in the emirates, so we see that as the opportunity. And third, obviously, physical infrastructure uh is clearly something we see uh huge demand for, right? From construction, but also the infrastructure around pipes, uh, you know, and and with the supply chains getting disrupted, there's a lot of rebuild, which is also required. So these are the opportunities uh in terms of uh, you know, the areas where we see immediate demand, but also the broader theme and uh, you know, which is make it in the emirates, is is something uh we are seeing. And and as a bank, we obviously want to be very much focused uh and committed to that journey the country is taking.

SPEAKER_01 5:11

Of course, of course. So obviously, businesses are navigating in this environment, uh, and as a business, you need to manage your cash flows accordingly. How are we seeing businesses reacting to the demands on their business when it comes to a cash flow perspective? And what types of things are we doing to support them?

SPEAKER_00 5:26

So again, you know, linking to the industries which got impacted, uh, obviously for industries which were very heavily reliant on travel and tourism, new cash generation got impacted, in some cases quite significantly. Having said that, these are traditionally cash-rich industries. So what what we do see for the more established uh travel and tourism operators, they had enough cash buffers to at least last minimum three, but sometimes even more than a year. Sure. Secondly, behind the business, there's obviously the owner, the promoter, the family. And a lot of the families, you know, are rooted in the UAE and they have investments in the UAE which could be liquid or also in the form of property. So what we have seen is uh they bringing their personal wealth, personal investments into the business to ride through some of the challenges on new cash generation. Uh yeah. So so that's for the impacted uh sectors. For the less impacted sectors, uh, where the paymasters are typically large conglomerates, uh GREs, as we would call them in the UAE, the flow of cash continues. So we don't see much of a challenge there. And I think by and large, the measures which have been taken by CBUAE as well as the resilience of the banking system has ensured that UAE remains very, very strong when it comes to capital adequacy from banks as well as the liquidity. And a lot of measures have been taken by CBUAE to ensure liquidity flows to the banks uh as and when they need it.

SPEAKER_01 7:05

And I think that's showing dividend, right? I think uh the natural assumption from a crisis like this is that there's an assumption that uh there will be a run on the banks, right? Or customers would leave, people would go, businesses would shut down. We haven't seen that.

SPEAKER_00 7:19

No, absolutely. So I think that that that was quite uh that's a very, you know, important point that when the crisis emerged, for the first couple of days, yes, uh, we saw a certain uh uh, you know, where for clients who had an optionality to take money, and this was more on the high net worth segment. Uh, but now we see money coming back. Uh and and and and again, it's it's the most important thing is the businesses are rooted in UAE. They believe in the long-term success of the country. Uh, yeah, so I think uh it's it's just fascinating to see the resilience uh even even in our bank, in our portfolios, and in turn, which is our clients.

SPEAKER_01 8:00

No, and it's it's a really interesting and and positive time, I'd say, to to be working in this industry. I guess from from our perspective, our businesses are uh uh managing this, that they're trying to move forward. What types of things are we as a bank doing to support those businesses?

SPEAKER_00 8:16

Yeah, so absolutely. So I think uh firstly, Rack Bank has been the bank which has supported SMEs through thick and thin. Prior to this crisis, be it COVID, be it the 2014 to 2016 uh SME mid-corporate uh sort of challenges. And then going back to 2007-2008, which was the global financial crisis and uh you know the the following of impact which happened in the UAE. So Rackbank has been committed to providing credit and providing you know fantastic digital experiences to uh the SME clients. Could be a micro business, which is just set up uh the business, the person could be new to UAE and the business is new to somebody who's been living into the in UAE, was a salaried individual, and now setting up a new business. So I think that's the the the first point I want to make that the commitment to uh SMEs is is not something which is relatively new. It has been there since the last 50 years, the bank has been in presence. Uh the second uh part I would say on uh how are we supporting and enabling SMEs during these periods, almost every organization, financial institution would support SMEs in the good times, but I think the real challenge comes, and that's where relationship matters, is that are you supporting them through the cycle, the good and the bad? So for us, uh right from micro all the way to corporates, we continue to provide credit. Uh our hero offering, which we call rack business loan, uh continues to perform very strongly. And in fact, what we've done is we've doubled down on a lot of our existing clients who actually need even incremental limits. Uh so we continue that. Uh, number one. Number two, with the CBUA resilience package, uh, we've obviously leveraged on that uh scheme where we have provided deferrals, uh, which is up to six months, uh, for businesses who are impacted from a cash flow perspective. At the same time, what we also see is that a lot of SMEs may have assets in their individual name or in the company name, and they may want to cash them out, not necessarily sell, given, you know, obviously the challenge is. Of course, the people would stake it, right? Exactly. So to provide a line of credit uh against that. And obviously, we are a strong uh trade and working capital bank. So from a solution perspective, we pretty much full suite, uh unsecured, partially secured, secured from segment perspective, right, from a new business all the way to corporates. And I think again, just want to call out the CBUA resilience package uh is is absolutely critical to continue the flow of credit, but also provide, you know, the uh deferrals in terms of uh existing loan obligations and should they need some time to repay that, given new cash generation called impacted for the impacted sectors and impacted clients.

SPEAKER_01 11:25

Yeah, I mean, it's so important that we're there for our customers when it comes to products in terms of cash flow and alleviating those concerns as well. But I think one thing I'm particularly proud of is that we're a digital bank with a human touch, right? Absolutely. So all of our systems have been online all the way through. We're there to support our customers, and obviously we're pushing the levels of digital innovation and technology, but we're also very much there from a human perspective. Can you talk to us about how you see the relationship management business in times like this?

SPEAKER_00 11:56

Yeah, so I think uh, you know, going back to our brand promise, uh digital with a human touch, and then within that, if you know, we say we are open for business. So so what are the proof points? I think there are enough proof points in the good times, but the challenging times, I would say, you know, our our our in our client base, almost all our clients are digitally active. We are digital anywhere and everywhere, but we are human when it matters. So a proof point of that would be that in these challenging times, if they need uh, you know, to ease their cash flow and they are looking for a deferral, they can apply uh online, but at the same time, if they want to talk to a relationship manager, we are available. That's that's one example. The second example is that for high value clients with high value of transactions, if they want, uh obviously we've got online FX available for them as part of their inbound or outbound remittance. But should they want to talk to someone, especially for large tickets, we are available. You know, uh obviously we've got our uh specialists in treasury who are very much available. So so these are examples that we are digital pretty much uh anywhere and everywhere, but we are also human when it really matters.

SPEAKER_01 13:20

And it's it's it's quite rare to see that now, right? Because you you see banks going in either one of the directions, right? They're either going fully automated, fully digital, can't speak to a human, and in times like this, that's a particular problem, or they're saying, look, we wanted this to be an entirely uh relationship-based business.

SPEAKER_00 13:38

Yeah, what what what I would say is, you know, having that uh, you know, striking that balance that yes, uh for everyday banking uh with Wow experiences, we want to be digital. But the minute they, you know, uh uh uh we talk about value-added solutions, or we are talking about, you know, uh areas where they need advice. A client needs advice. Digital will get us to a particular place, but after a while they do want that relationship and more importantly, that advice for the value-added service. So, what we aim to be is that bank which is digital with the uni, uh with the human touch, with an omnichannel experience that you could be on a digital online or mobile platform or click to chat, you get the same experience when you're talking to a relationship manager or speaking to a contact center or walking into a branch. So, so so that's what we really uh you know uh aim to be. Uh digital with the human touch, and very importantly, the omnichannel experience is consistent as opposed to being fantastic on one channel and not on the other.

SPEAKER_01 14:50

Yeah, and it's a it's a a very unique and a very uh very innovative way of thinking about it. Okay, so in the in the SME market, uh SMEs are particularly cash-rich in the UA. So only, you know, two two out of uh ten businesses actually need to borrow. So how how are we optimizing for those customers? How are we helping them?

SPEAKER_00 15:11

So, first and foremost is uh any SME or in fact any business or individual placing money with a bank, what is most paramount is trust. So, so you know, trust in the institution uh where they're holding the money and obviously in the country. Second is is the bank or the financial institution always on? Can I access the funds when I need it? Can I view them when I need it? Can I make the transfers when I need it? So for us, firstly, when we say always on for business, again, going back to the omnichannel, you want online, web, talk to an agent, speak to your relationship manager, walk into the branch, we are always on. That's most important. Secondly, uh, we want to bring value to our clients. And how are we bringing value to our cash-rich clients as well as cash rich who are actively transacting with us? So, first, for uh we've got a campaign which has been very, very successful. And looking at the success, we might look at continuing that. So the current campaign around the theme that uh we are open for business is we are offering 2% interest per annum for our existing clients uh who consolidate their banking relationship with us, in other words, bring new money into their accounts, as well as for our new clients with new money. Uh so we are offering 2% uh uh interest on their um as well as US dollar deposits. That's the first. Second, for domestic fund transfers, irrespective of how many fund transfers they make, uh, we charge them zero fees. Yeah. So this is a campaign.

SPEAKER_01 16:59

So important.

SPEAKER_00 17:00

Yeah, which is going on. So this is how we are bringing value to them. So you could have 50 employees, 100 employees, you know, uh 50 supplier payments in the month. We don't charge fees. Third, UAE being obviously a trade hub for both uh for import and export, when they convert uh from A currency to B currency, uh, we obviously offer competitive uh uh FX rates. But again, with the campaign which is currently going on, we're giving unlimited cashback in all currency pairs other than obviously DIRM to US dollar, which is pegged. So these are the additional proof points on uh how we are always on, but also bringing value to our cash-rich clients.

SPEAKER_01 17:43

Amazing. So we're obviously a full suite bank. We've got, you know, products to cover every, you know, from a small business all the way up to corporate. Um, and that's something I think that we're very proud of. Um, our systems are always on, we're always open for business. We're we're a front runner when it comes to the digital side. What types of innovations, either in product or in uh on the technical side, do you see coming in the SME market?

SPEAKER_00 18:08

So I would take it in two parts. First is just on the experience. So obviously, uh our mobile bank as well as web banking uh has been consistently rated extremely, extremely well. Thank you. Uh and obviously Thomas, who's in charge of running these platforms for us. Uh having said that, we want to be not just the best in UAE for business, but pretty much in the region. And then eventually my aim is to be the best SME digital bank with a human touch, having the human ability when it matters across the globe. So that's something we will continue to invest in and improve our experiences on already experiences which are actually market leading. So that it really positions us as the leader, not just in the country, but in the region and beyond. Uh at the same time, we want to be very nimble and agile. So as new technologies come in and AI is obviously an evolving space, a lot of the use cases for most organizations are around how are we leveraging AI to improve productivity for the organization? What me and my team, including Thomas and our team, what we are really looking at is that how can we improve that experience for our clients? Uh that's that's one. Second is how can we embed AI so that they can improve and drive their business, grow their business. So so these are, you know, so from a proposition perspective, what I would look at eventually is that not just helping SMEs for banking and financial services, but helping SMEs go beyond financial services as well. And uh how how they may apply AI to drive productivity, grow sales. So so so that's uh another use case.

SPEAKER_01 20:08

Uh and I I certainly think that we're we're moving in the right direction there. I think it it's all too easy, right? To launch and deploy a chatbot, right? But if you speak to our clients, nobody's ever asked for a chatbot, which is why I think we're really onto something with the digital with the human touch. Absolutely. Providing digital services that are automated, are straight through, allow convenience for customers wherever they are, whenever they want to do that service, but also when they need support, they get through to a human, right? Because uh at the moment, I think that is the best deployment of that kind of technology. Um, I think also that the UAE is very, very innovative. So, you know, the government entities that support us are also pushing for innovation in the banking sector. Can you talk a little bit about what types of initiatives the government uh are working with us on?

SPEAKER_00 20:58

Absolutely. So so uh I mean UAE has obviously been at the forefront, and what we are really looking forward to is uh out of the many initiatives, uh first is open finance. Uh so with open finance, uh and the second being on EKYC, let me double-click into both of them. So first is around open finance. Uh with that, based on the user, in this case the SME, providing consent to their existing financial services provider, exactly, and obviously data protection, extremely, extremely important. So everything we do and we will do is obviously subject to user consent. We could bring them that experience which uh right from consolidating their banking relationship to even viewing their con their their banking relationship, uh, to in addition to that, rather than asking for additional information subject to user consent. Consent, we already would have access to their other relationships, such as bank accounts or uh uh balances in other banks. Uh, we've got a fantastic bureau here, both on the corporate and the individual. Yes. Uh so one of the biggest pain points for SMEs has been access to finance. Second is the banks and financial institutions ask for too much information. Yes. Even today. Even today, exactly. So with open finance, we are getting geared up to further improve our experience, uh, especially when they need credit, number one. Number two, uh relationship view, not just of the business they have with Rackbank, but across uh the other banks and financial institutions. Uh and third is uh payments. Payments can become a lot more seamless, uh, a lot more easy, which obviously when they are on digital channels, uh uh they they obviously are. But I think with open finance, the experience would be much faster. And then that's where I would bring in obviously the initiative around EKYC. Uh, an SME who wants to be multi-banked, uh, and especially microbusinesses when they move into the SME and commercial, they want to be multi-banked uh to diversify their risks uh as well. Every bank needs to onboard them. And we ask for the same information from the SME again and again.

SPEAKER_01 23:26

In different journeys, in different styles. Exactly. Yeah.

SPEAKER_00 23:29

Absolutely. So that's where, again, with EKYC and open finance, we would take away a lot of that pain the SME has to deal with multiple banks as opposed to they're already now certified and uh approved from a KYC perspective as per CBUA uh regulatory requirements. So I think these experiences will help SMEs to also improve their productivity when they're dealing with banks.

SPEAKER_01 23:54

Yeah. And I think it it will provide a lot of headspace for banks, right? So a lot of energy within a bank currently in the UAE, and it's it's not just us, it's our partners uh and uh other banks as well, is is spent on you know bringing your customer on board, checking the documents, checking the the you know, compliance and all that kind of stuff, and then putting them into the system. I think if that was uh automated, if that was centralized, if that was taken outside of the bank's you know main concentration path, then it allows us much more brain room to go, how do I build new innovative products? How do I work on sustainability? How do I do all of these things that you see in more perhaps more advanced markets such as Singapore, where you've seen that?

SPEAKER_00 24:36

Yeah, yeah, absolutely.

SPEAKER_01 24:37

So, Vishar, you join us uh with a significant amount of business banking experience in different markets, but you've you know quite uniquely got a significant amount of fintech and digital experience as well. Talk to us about your your journey there and that and how you managed to span both worlds.

SPEAKER_00 24:55

Yeah, so so very interesting. I started my banking career in the UAE being a relationship manager for one of the international uh banks. Uh, and that's where uh you know relationship management, understanding trade, uh, foreign exchange, etc., are the learnings. Fast forward to my most uh recent uh experience before I joined Rack Bank was uh being part of uh Grab and SingTel's joint venture based in Singapore, where we launched three banks uh across Singapore, Malaysia, and Indonesia. And I would say launching a bank from scratch with uh new technology and not having any clients was also a great experience. Uh so the learnings I would really say is that uh when digital services work, they work brilliantly. Uh but there are many a times uh companies would want advice, number one. Number two, they may want products and solutions which a digital bank may not have yet built. And third, on the individual side, as well as businesses who are very, very cash-rich, uh, after they grow at a particular size in terms of wealth or cash, they they need that personal touch. And I think those are the learnings I look to bring uh you know in Rack Bank with being the digital bank but being human when it matters. The other thing I would say is obviously the concept, especially for the Gen Z, is that uh most of the Gen Z would never have visited a branch or do not want to visit a branch. Or written a check or exactly. What is a checkbook? I think I've lost mine. And obviously in a lot of countries, uh there's no concept of checkbook any longer. And I think in time to come, maybe we'll also go down that path in the U.S. Yeah. And and which is where, you know, how can uh banks be part of the buying or the selling journey or the decision journey? Where the journey is not starting by, hey, download the app and start transacting. But the journey is starting where I'm a small business marketing on TikTok, uh, or I'm a consumer who's now looking to travel and I'm looking for the best uh uh sort of uh, you know, connections in terms of flights and hotels. And that's where the financial services provider or the fintech, and in our case, we want to be the financial services provider with that uh superior experience, which otherwise fintech would give as part of that journey. So I think that's the most uh I would say recent experience of not just building the bank, but being embedded in the ecosystems of our partners and in that buying or the selling journey, depending on being the business or the individual, is what we really aim to do.

SPEAKER_01 28:00

No, and it's fascinating. And do you see that um changing the types of individuals you want to hire, particularly into a relationship management team, right? Where traditionally they would be focused on the finances and bigger trading kind of businesses. If the new wave businesses are coming through, surely you need different kinds of people to serve them.

SPEAKER_00 28:17

Absolutely. That that's that's a fantastic question. So I think, you know, I would I would take in two parts. One is the client base. Uh a lot of the new businesses which are being set up are actually internet-only businesses or uh digital first. And then as they grow, for say, say, say in in food, uh, you know, it could be a cloud kitchen, and as they scale up, then they have a physical store. Similarly, on the people side, obviously we need relationship managers who are providing the value-added uh sort of advice when it matters, as opposed to being the first port of call when they have a service request, because that is now delivered digitally in any case. Second, in terms of talent, obviously we want to upskill and you know, train, including myself. And I think you know, all of us we know that whatever skills uh which we currently have harnessed and honed, they are going to be relevant in the next three to five years.

SPEAKER_01 29:14

Yeah, it's moving so quickly.

SPEAKER_00 29:15

Exactly. So so so that's where embracing AI and also being ahead uh, you know, in that journey uh as a learning organization and bringing the talent, uh, especially on data analytics and applied AI into the business, not just in the engineering world, more specifically uh on the development side when they're developing uh new experiences, but also for the relationship manager that how they could bring that insight to their client through applied AI is what we really aim to kind of embrace. And that's the talent upskilling as well as the new talent which we are looking at to bring in the business bank.

SPEAKER_01 29:56

Amazing. A very positive path. So obviously you're you're fairly new to Rack Bank, but you're not new to the region. What is your forecast for the the SME market here in the region and what gives you confidence that it's going to become a thriving and innovative place?

SPEAKER_00 30:12

So, first I would go back to the resilience uh which which UAE has shown during COVID times and even prior uh global financial crisis, etc. So the recovery uh will happen. It's a matter of uh when and not if. Uh SMEs are the backbone of UAE. So that secular trend and that contribution is not likely to change anytime soon. Uh the number of new businesses which uh are getting set up in the UA and number of new people making UAE their home, maybe there's a temporary blip, but the secular trend, again, we don't see that changing. So, in other words, we look at uh the number of new businesses being set up will continue to kind of uh uh uh, you know, we'll go back to the trend which we saw before the crisis, inshallah, very, very soon. Uh so by 2030, we do estimate at least one million SMEs in UA. Uh, we are roughly at about 600 to 650,000 uh businesses.

SPEAKER_01 31:18

And accelerating, right?

SPEAKER_00 31:20

Yeah, absolutely. Second is uh what I would now want to talk about is an SME who is integrated into the UA ecosystem and the UA ecosystem becoming more make it in the emirates. So that's a key theme where uh the SMEs are not just importing and exporting, but they're actually part of a value chain, say of a large manufacturer where they are importing plastic or packaging materials, also then value adding into that process and then supplying to, say, a large food and beverage manufacturer. On the downstream, again, the SMEs are distributors of these food and beverage products across the seven emirates and actually going even beyond the UAE. So I'm fairly confident that uh uh you know the secular trend of the number of new businesses being established in the UAE will continue to increase. Uh, that's one. Second, the importance of SMEs in the UAE is is is gonna remain uh and only increase. And SME sector is the largest uh employer as well of the workforce, and that will also continue to increase. I want to also talk about the the business owner, uh, you know, the owners of these SMEs who call UA their home. And that's where as a bank we not just bank the business, but also the owners and the employees. So so so that's something we continue to see. And uh obviously that will continue to grow. So so the secular number of the the trend of the number of SMEs, but also the individuals who call UAE home will continue.

SPEAKER_01 33:06

And I think that's that's only expedited in the last 10 years or so, right? There's more that if you look at the the the data, particularly and we've got lots of data with our very, very successful Skipley app, right? Yes. Parents paying for schools, absolutely, right. A lot more people are calling the UAE uh their home. Yes. Long may it continue. And I think you know, this too shall pass. And we're always here for businesses that want to grow as well.

SPEAKER_00 33:30

Yes, absolutely. We are we are open for business in good times and the not so good times as well.

SPEAKER_01 33:35

Of course. Michelle, thank you so much for spending time with us. It's been a pleasure. Yeah, likewise, much appreciated.

SPEAKER_00 33:41

Thank you.